This Issue - Icwai

PROJECT PROJECT PROJECT MANAGEMENT
MANAGEMENT
to take place. All review comments or analysis should
be included as an attachment to the basis of estimate.
xiii. Reconciliation : This section should provide
an overview of the major differences between the
current estimate and the last published estimate
prepared for this project. Identify the cost impacts due
to scope changes, pricing updates, labor productivity
adjustments, estimate refinement, etc. Also provide
a reconciliation of all reviews preformed and how they
were incorporated into the estimate. A more detailed
reconciliation or cost trending report can be provided
as an additional attachment if necessary.
xiv. Benchmarking : This section should document
any comparisons of overall estimate metrics, ratios,
and factors with similar projects, historical data, and
industry data. Projects used in the benchmark
comparisons should be similar in process type and
overall value. If significant variations of the estimated
project costs versus the benchmarks exist, those
inconsistencies should be identified and commented
upon. A more detailed benchmark analysis report may
be included as an attachment to the basis of estimate.
xv. Estimating team : In this final section, all
members of the estimating team should be identified
and their roles and responsibilities defined.
xvi. Attachments : Several supporting documents
will generally be included with the basis of estimate -
(1) estimate deliverables checklist to support
preparation of the estimate in accordance with its
associated estimate classification, and to document
whether certain deliverables were in fact available
during preparation of the estimate; (2) reference
documents e.g. the drawings, manuals, texts, notes,
specifications, and other references used in developing
the estimate; (3) schedule documents e.g. design and
construction schedule, including working days, shift
assumptions, key milestones and critical path
activities, and (4) include any other attachments that
may be necessary or required e.g. reconciliation
report, benchmarking report, risk analysis report,
escalation calculations, etc.
Estimates are prepared at various stages of a
project. While a more detailed estimate will generally
require a more detailed basis of estimate; this is not
always the case. A conceptual estimate will probably
be based on a limited amount of scope definition but
it may require a more detailed basis of estimate. It’s
not uncommon for a basis of estimate for a conceptual
estimate to be more thorough than one prepared for
a more detailed estimate because there are often more
assumptions made at the conceptual stage of a project
that require greater documentation. Conversely, there
may be times when the project definition is so
complete or simplistic that a basis of estimate does
not require a great amount of detail. In the latter case,
a three or four page document may be sufficient to
convey the basis of estimate. Other factors that may
affect the level of detail in a basis of estimate are the
projects work breakdown structure, consideration for
new technologies, contracting strategy, etc. The basis
of estimate should contain a concise level of detail to
fully support the review of the estimate by those that
have not been a part of the preparation of the estimate.
The basis of estimate provides a definition of the scope
of the project as estimated, and should establish the
basis for change management subsequent to
publication of the estimate. ❐
References
■ Documentation Guidance for FAA Cost Estimates,
January 2003, US Federal Aviation, Administration
(Investment Cost Analysis Branch, ASD-410).
■ Estimating Techniques and Tools for Project Managers,
September 2004, Keane.
■ Preparing a Basis of Estimate by Todd W. Pickett, 2005
AACE International Transactions, EST. 10.
The Management Accountant |September 2011 769